Insurers Can't Tell You Where to Buy Parts - BodyShop Business
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Insurers Can’t Tell You Where to Buy Parts

We dread the day insurance companies try to dictate where shops must buy their OEM parts because we’ll then lose the goodwill and volume discounts we’ve established over decades with local dealers. (It will be difficult to get special clips from the local dealer on a Friday afternoon if he knows that all the big parts for the job were purchased elsewhere.)

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Unfortunately, many shops are now letting the camel poke his nose under the tent by allowing insurance companies to choose vendors for imitation parts, typically through data providers’ “Replacement Parts Reports” appended to appraisals.

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We’re expected to spend hours on the phone to order six parts from six different vendors, confirming that what was listed is actually equivalent to the OEM part. If we play their game, we find the listed price may be an “average” price, may be simply incorrect or may be a correct list price but doesn’t allow for the standard 33 percent mark-up. We also frequently find that the part isn’t available. Insurance companies know that price increases for many of these unavailable small parts (subsequently purchased from the dealer) will never show up in a supplement.

The worst aspect of this scheme is dictating that shops buy from out-of-town vendors who don’t deliver. We’re expected to stop work in the office every time the UPS truck arrives to write a COD check for a wheelcover from an unknown vendor, only to discover after UPS leaves that the wheelcover is wrong.

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No insurance company can require the purchase of parts from a specific supplier, and no insurance company can refuse to pay more than an unrealistically low figure for a part. Every business has the right to buy from its normal suppliers and charge its list prices as long as these are reputable companies with reasonable pricing. An insurance company may assist with information about parts sources. If, however, an insurance company cites a parts price but there’s no vendor in the repair facility’s local area (i.e., no vendor who physically delivers to the shop) who sells the part at that price, then that part price isn’t a “fair and reasonable” price and cannot be used as the basis for adjusting a claim.

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Our company never agrees to do this. We tell appraisers to be sure to write a price from a vendor who actually has the correct part and who delivers to our area.

Damaged accessory items that appraisers price at Pep Boys or Sears are another problem, since retail stores usually don’t deliver. In that case, the insurance company must either pay for freight charges for shipment from a wholesale distributor or pay for mileage and time for an employee to go on a shopping trip to the mall.


Writer P. Michael Riffert is owner of Engle’s Frame and Body Service in Ephrata, Pa.
The views expressed in this guest editorial do not necessarily reflect those of BodyShop Business.

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Got something to say? Fax your opinion on an industry issue to “Viewpoint Editor” at (330) 670-0874, and it may be featured as a Guest Editorial in an upcoming issue of BodyShop Business.

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